Engineering Costs

Engineering costs for many years have basically been included in the standard burden rate of the shop. There are many situations now in this world where manufacturing is very competitive and technical that the standard burden rate of the shop cannot include all the costs associated with the engineering costs.

Direct Engineering Costs

Direct engineering costs would include things like design work, engineering, prototyping, testing and tooling design work. Many job shops today have become turnkey where they don’t produce just a single small widget which is easy and simple to engineer, cost and manufacture. On the other hand the jobs that manufacturing companies are required to produce can be very extensive including everything from a small box to an entire machine tool made up of of 100’s or even 1000’s of components. The costs associated with doing the initial engineering can be very extensive and rightly so. Many job shops have CNC machinery and during the estimating process to arrive at the most accurate costs they actually program and sometimes even manufacture the prototype.

Indirect Engineering Costs

Indirect engineering costs include computers, software and man power required to assist in manufacturing the product. The costs of these indirect engineering items can be extensive and should be allocated across the job that uses these tools.

MIE Solutions provides software resources to help you manage your direct and indirect labor throughout the product life cycle from quoting and estimating, job costing to invoicing.

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Author: MIE Solutions

David Ferguson has over 20 years of experience in the manufacturing and fabrication industry. David Ferguson has been to over 100 manufacturing companies helping and guiding them to be more efficient and cost effective.
As a child in Junior High School David Ferguson found a passion for the early computer systems, which would drive much of his future work. David Ferguson created and sold his first computer program, Arrow Data Systems, which was an early CAD/CAM system for the Apple 2e Computer. In the late 1980's after seeing his father (a sheet metal manufacturer) come home many nights estimating, David Ferguson saw an opportunity to optimize his effort through computer technology. Shortly thereafter the FabriTRAK Production Control package was developed. The Quote It! estimating package was developed out of the FabriTRAK system to become one of the leading sheet metal estimating packages in the world. David Ferguson has always had a passion for developing software to make the manufacturing process simpler, faster and more efficient.
Prior to founding MIE Solutions David Ferguson worked with his father at Alco Sheet Metal, METALSOFT Inc. and was a consultant at Toyota Motors Sales. David Ferguson has his Masters in Computer Science and Mathematics from California State University, Long Beach.
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I guess what you have presented is quiet practical and has drove my interest into your blog. I personally being an Author have this opinion that estimation are to be made first internally and then quotations be presented to the clients. But thanks for sharing this with us, I appreciate.